Life insurance
Life insurance is a policy that
will pay a specified sum of money to the estate of
the insured or nominated beneficiary upon the death
of the life insured. In exchange, the insured person
agrees to make regular payments of life insurance
premiums (on a monthly or quarterly basis) to the
life insurance company. The life insurance policy
is subject to strict limitations, exclusions, terms
and conditions and it is therefore extremely important
for you to know the life insurance policy limitations,
exclusions, terms and conditions before you sign the
contract. You should seek advice from a licenced insurance
broker prior to signing any life insurance policy
document.
Do you need this type of insurance?
Have you ever thought how your
family would cope financially if you were to pass
away unexpectedly? You should regularly review your
family's financial obligations, in conjunction with
your life insurance broker, to ensure that you are
appropriately insured. The greater your financial
obligations and the more dependants you have, the
more life insurance you may need to protect your assets
and your family's financial security. Obligations
which may need to be considered are your mortgage,
paying for your children’s future education, settlement
of personal debts, funeral expenses and your family's
future living expenses.
How much life insurance cover
do I need?
The purpose of
life insurance is to provide your dependents with
a sum of money sufficient to pay out your debts and/or
to provide an income sufficient to support your family
for a period of time - usually until your children
are 18 years old. As everyone's situation is different,
the level of life insurance cover required will vary.
Most risk advisors will recommend that you have
life insurance cover equivalent to a minimum of 10
times your average annual income.
How
do you choose the right life insurance policy?
It is best to talk to a life insurance broker
who has access to a wide range of competitive life
insurance products. They have the experience and expertise
to guide you in choosing the right life insurance
policy for your particular situation and budget. Life
insurance premiums vary depending on age and health
history. Your life insurance broker can provide a
guide on the premiums from a range of life insurance
companies, but your application will need go through
a process called underwriting where your application
will be formally assessed by the life insurer and
your final premium calculated. You will need to be
comfortable in investing these premiums into a reputable,
stable, financially sound company. Most people rely
on one of the major rating agencies such as Standard
& Poor’s who specialize in rating the ability
of a company to meet it financial obligations. You
should aim to be covered by an insurer with a 'AAA'
rating.
Further information
Life insurance is an important and integral
part of a comprehensive and sound financial plan.
When you enter a life insurance policy it is also
best to review your will to ensure it is current.
The making of a Will ensures that your assets pass
to the people of your choice. If you do not have a
will, your estate will be subject to state intestacy
laws. This legislation may not be consistent with
your wishes. Please refer to the articles on Wills
& Estate Planning.
Disclaimer
This web site is not designed to provide personal
financial or investment advice. The information provided
is general in nature and does not take into account
your particular investment objectives, financial situation
or investment needs. We recommend that you speak to
a licenced risk advisor or life insurance broker
before you make any decision regarding life insurance. |
